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Theses and Dissertations 1. Thesis and Dissertation Collection, all items

1987

Models for conducting economic analysis of alternative fuel vehicles.

Grenier, Danny R.

http://ndl.handle.net/10945/22371

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DUDLEY KNOX LIBRARY WAVAL POSTGRADTATE SCHOOL

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THESIS

MODELS CR CONDUCTING ECONOMIC ANALYSIS OF Afar ESP Uri aC

by Danny R. Grenier

June 1987

Thesis Advisor: Dan C. Boger

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MODELS FOR CONDUCTING ECONOMIC ANALYSIS OF ALTERNATIVE FUEL VEHICLES

‘2 PERSONAL AUTHOR(S) aC Nanny R

"3g TYPE OF REPORT . 135 TIME COVEREO 14 OF PORT (Year Month Day) 1S PAGE COLNT Master's Thesis FROM TO 19875 June d 74

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FELD Aleernaeivecenuecls- se llectriec Vehicles; a ae Dual Fuel Vehicles; CNG Vehicles a

"9 ABSTRACT (Continue on reverse if necessary and identify by block number) The present status of alternative fuel vehicles, specifically electric-

powered and compressed natural gas-powered vehicles is summarized. Spee Time advantages and disadvantages of each vehicle type, in comparison to the gasoline-powered vehicle, are reviewed. A life cycle cost model is formu- lated for each vehicle type. An integer linear program is derived and explained as a means of determining the optimal mix of vehicles for a command's transportation fleet. The models are tested by running several test cases using data from the Naval Postgraduate School transportation

office.

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RW) CNCLASSIFIEOUNLIMITEO () SAME aS RPT OC orice users Unclassified 22a “SAME OF RESPONSIBLE ‘NOIVIOUAL 22d TELEPHONE (Include Area Code) | 22¢ OFFICE SYMBOL ror. Dan C. Boger (408) 646-2607 Code 54Bk OD FORM 1473, 84 MAR B83JAPReditiON May be used until exhausted SECURITY CLASSIFICATION OF THIS PAGE All other editions are obsolete UNCLASSIFIED

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Models for Conducting Economic Analysis of Alternative Fuel Vehicles

by

Danny R. Grenier Lieutenant, Supply Corps, United States Navy B.S., Radford College, 377

Submitted in partial fulfillment of the requirements for the degree of

MASTER OF SCIENCE IN MANAGEMENT

from the

NAVAL POSTGRADUATE SCHOOL June 1987

CC

ABSTRACT

The present status of alternative fuel vehicles, specifically electric-powered and compressed natural gas- powered vehicles is summarized. Specific advantages and disadvantages of each vehicle type, in comparison to the gasoline-powered vehicle, are reviewed. A life cycle cost model is formulated for each vehicle type. An integer linear program is derived and explained as a means of determining the optimal mix of vehicles for a command's transportation fleet. The models are tested by running several test cases using data from the Naval Postgraduate

School transportation office.

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TABBED Or CONTENTS

INTRODUCTION ------------------------ +--+ A. PROBLEM STATEMENT ----------------------~~~~~ ~ B. OBJECTIVE --------------------------~ Cc: ALTERNATIVES ----------------~----- +--+ D. ALTERNATIVE SELECTION CRITERIA —-———— == E. MEASURES OF EFFECTIVENESS —————_ =e F. ASSUMPTIONS -------------------------~-+- G. RESEARCH METHODS ----------------------~~~~ H. SUMMARY ----------------------------~ ALTERNATIVES ---------------------- + A. ELECTRIC=-POWERED VEHICLES ---------------~~-—— 1. Background ------------------- ---------+-- 2. Vehicle Description --------------------- a. The Battery ------------------------- b. The Controller =-—--====—-=.=.-—]]-]2.. 22 Ss The Motor --------------------~---~~-~-~-— d. The Transmission -<-<----------<------— e. The Differential -------------------~- 3. Advantages of Electric-Powered Vehicles - 4. Disadvantages of Electric-Powered Vehicles --------------------------~+~-~-~~ 5. Electric-Powered Vehicle Performance Data ----------------- - - - - - - - - - - 6. Electric-Powered Vehicle Cost Data ------

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COMPRESSED NATURAL GAS-POWERED VEHICLES ----- 1. Background ----------------9 999-52 ------- 2. Vehicle Description ---------------------

3. Advantages of Compressed Natural Gas Vehicles --------------------------------

4. Disadvantages of Compressed Natural Gas Vehicles ----------------------------

5. Compressed Natural Gas Vehicle Performance Data ------------------------

6. Compressed Natural Gas Vehicle Cost Data -------------------------------

LIFE CYCLE COST MODEL ----------------------- LIFE CYCLE COST COMPONENTS ------------------ LIFE CYCLE COST FORMULA --------------------- CASOMNE-—POWERED VEHICLE Etat CYCLE COST ==-- Preece POVERE Dev EneeCEE LiFe -CyYCchn coOsr ——-——

COMPRESSED NATURAL GAS-POWERED VEHICLE LIFE CYCLE COST -----------------------------

LINEAR PROGRAMMING MODEL -------------------- FIXED CHARGE INTEGER LINEAR PROGRAM MODEL --- SUMMARY AND CONCLUSIONS ---------------------

VERCLE DLiRE CYGCERE COST €COMeEUrALIONS ==--=-=--

LIST OF REFERENCES errr rrr rrr tt tr strstr tert ttc ccc cccscccc

INITIAL DISTRIBUTION LIST cerrrrrr rr rrr rrrrrrrrrssrscrc---

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ive INTRODUCETON

Today's military managers must contend with decreasing budgets while mission requirements continue to expand. In order to meet these expanding requirements, military managers must conserve the scarce financial resources available to them.

The Public Works Center Transportation Office is required to provide vehicles for the transportation requirements oof the commands it supports. These transportation requirements run the gamut from maintenance vehicles to passenger sedans to passenger buses. The means of propulsion for all of these vehicles is usually the internal combustion engine with gasoline as the fuel source.

Recent history has shown the price of gasoline to be somewhat less than _ stable. This instability can be a financial manager's nightmare. Departmental budgets are forecasts or predictions of what funds the department believes it will require for some future period. In the government, this future period can be more than a year away. Thus, the budget the transportation manager submits today can be drastically affected by an increase in the price of gasoline tomorrow. What the transportation officer desires is a fuel source which is cost effective and stable in

price.

Two alternative fuel source vehicles that have generated interest within the transportation industry are electric- powered vehicles and compressed lgvstieblersi IL gas-powered vehicles.

This thesis looks at these two alternative fuel vehicles and compares them to the present baseline of the gasoline- powered internal combustion engine vehicles. In order to Simplify matters, this thesis will only deal with sedans, vans, and light trucks.

Formulas for computing the life cycle costs of the vehicles are derived in the thesis. After determining the life cycle costs of the various types of vehicles, the transportation manager must decide what mix of the various types of vehicles would allow him to meet his operational requirements at the lowest cost. In other words, what mix allows him to optimize his transportation budget?

The thesis explains the use of a fixed charge linear program to obtain the optimal mix of vehicles. Linear programming is an operations research tool which is used to determine the optimal allocation of limited resources, in this case, the transportation budget. fieeaoing lanear programming, the manager can subject the results’ to sensitivity analysis which allows the manager to test the optimal solution by changing the various constraints such as

the funding level or various cost elements (i.e., fuel cost,

maintenance cost, operating cost) and observing the effects

on the optimal solution.

we PROBLEM STATEMENT

The instability of the cost of gasoline has stimulated an interest in alternative fuel vehicles. A means to compute the life cycle costs of the various types of vehicles is required. Having determined the life cycle costs of the various vehicle types, the transportation manager requires a means of determining the optimal mix of the vehicle types based on his budget constraint and mission

requirements.

Bi OBUECTIVE

The research objective is to derive a procedure for computing the various vehicle life cycle costs, then use these life cycle costs to determine the optimal mix of vehicle types. The underlying objectives are:

1. Present an overview of the present state of the art of the electric-powered vehicle industry and the compressed natural gas-powered vehicle industry. This overview will include an assessment of the operational capabilities of both the electric-powered vehicle and the compressed natural gas-powered vehicle.

2. Develop a model for determining the life cycle costs of the various vehicle types.

3. Develop a fixed charge linear program for determining the optimal mix for a typical Public Works Center transportation fleet.

C. ALTERNATIVES

The - alternatives to the gasoline-powered internal combustion engine vehicle that are considered are the electric-powered vehicle and the compressed natural gas- powered vehicle.

The electric-powered vehicle has been tested extensively by large companies and the United States Postal Service. While it is not a widely used vehicle in the United States, it is quite popular overseas. There are various limitations on the use of the electric vehicle due to its limited range and cruising speed.

The electric vehicle must be recharged daily. A few models of electric vehicles are equipped with an onboard charging unit but this is the exception rather than the rule. As such, the electric vehicle is usually required to return to the charging unit each night. This makes the electric vehicle impractical for extended trips.

Another limitation on the use of the electric vehicle is the cruising speed attainable by the vehicle. While some vehicles are able to attain speeds of over 55 miles per hour, this, again, is the exception rather than the rule. A drawback of attaining high speeds in an electric vehicle is that the range of the vehicle is drastically decreased with an increase in speed. Most electric vehicles are designed to operate most efficiently at speeds of up to 35 miles per

MOUTr .

The compressed natural gas-powered vehicle has been used extensively by natural gas utility companies in the United States. Much like the electric vehicle, it enjoys more popularity overseas than in the United States. The compressed natural gas-powered vehicle that is most popular is actually a conversion of the gasoline-powered internal combustion engine vehicle. The conversion process allows the vehicle to operate using either compressed natural gas or gasoline. Due to this ability to use two fuels, it is termed a dual fuel vehicle.

Due to this dual fuel capability, the compressed natural gas vehicle does not have the range limitations that the electric vehicle carries. If a compressed natural gas vehicle is required to operate in an area where natural gas refueling equipment is not available, a simple turn of a valve will switch the vehicle from natural gas fuel to gasoline.

The primary limitation caused by the compressed natural gas conversion of the gasoline internal combustion engine vehicle is a loss of cargo space due to installation of the compressed natural gas cylinders.

The electric-powered vehicles and the compressed natural gas-powered vehicles will be judged against the baseline of the gasoline-powered internal combustion engine vehicle. Due to the widespread use of the gasoline vehicle and its

operational capabilities, there are few limitations on the

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vehicle type. Range is unlimited due to the many gasoline stations in the United States and overseas. Nearly all gasoline-powered vehicles can easily attain the national speed limit of 55 miles per hour.

Due to the unlimited range and the high cruising speed attainable by gasoline-powered vehicles, these vehicles are considered high performance vehicles. In contrast, low performance vehicles would be characterized by cruising speeds of less than 55 miles per hour and reduced range.

For the purpose of this thesis, the optimal vehicle is the vehicle which meets the minimum mission requirements

placed upon it at the lowest life cycle cost.

D. ALTERNATIVE SELECTION CRITERIA The two keys to determining the optimal vehicle for a particular task are:

1. Determining the requirements that will be placed upon the vehicle.

2. Determining which vehicle type can meet the minimum requirements of the task at the lowest life cycle cost.

These two keys require the Public Works Center transportation officer to first determine the types of requirements that are placed on his vehicle fleet. These requirements are usually in terms of range, cruising speed, and load.

Once the transportation officer has determined how many

high performance vehicles and low performance vehicles are

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required to meet the requirements placed on his department, he can then look at meeting these requirements with the

lowest life cycle cost vehicle type.

E. MEASURES OF EFFECTIVENESS

The following measures of effectiveness are used to determine whether a vehicle type is classified as high performance or low performance.

1. Range--Range is defined as the distance a vehicle can

travel between refuelings. For the purposes of this thesis, the terms refueling and recharging are synonymous. A high performance vehicle is capable of

unlimited range. A low performance vehicle's range is limited by the location of its refueling station. (homebase).

2. Maximum cruising speed--The maximum cruising speed is defined as the maximum speed a vehicle must be able to attain and travel at for an extended period of time. This is not to be confused with the maximum